HMRC denies change of policy but invites claims nontheless
In a surprise announcement, HMRC is inviting claims from businesses which have registered for VAT and which have suffered a restriction in the VAT that they are entitled to claim for assets on hand at the time of registration.
The announcement seeks to 'clarify' the rules which they say have always permitted full recovery of the VAT on the asset even if it was previously used in the business for a period prior to registration.
There is an acknowledgement that there has been inconsistent treatment so to rectify the position HMRC are inviting claims from any business which has suffered in the way, whether by voluntarily reducing the claim originally made or whether HMRC has specifically reduced a claim via the issuing of an assessment to recover over claimed VAT.
The background to a sudden announcement 'reconfirming' HMRC policy lies in what HMRC tell their own officers to do in their 'Internal Manuals'. These are now published online and one of them with the catchy reference VIT32000 clearly states that any claim for assets on hand must reflect depreciated use to take account of the fact that an asset had been used previously for the purposes of a trade which was not registered for VAT.
The example quoted in the Manual is a van purchased and used ion a business which was not registered and subsequently becomes registered and the instruction to officers is 'The amount of VAT that can be recovered …should reflect the use of the van for making supplies before registration'. It seems hardly surprising that there has been 'inconsistent treatment' given that officers were given this incorrect instruction!
No Advice
The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.
Information
The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.
Share this article